Consumers have been victims of food fraud for as long as trade itself; medieval bread was adulterated with chalk, ancient Roman wine was sweetened with lead, Americans were unwittingly fed illegal horsemeat in the 1800s and more recently, baby formula and pet food have had their apparent protein content illegally enhanced with the addition of melamine. It is easy to understand why a miller in the middle ages might have diluted his flour with chalk or an ancient winemaker might have added honey or water to his wine; the ‘enhancements’ were done to increase profits or to otherwise help their businesses, for example by being able to meet demand when materials were in short supply.

The motivation for financial gain experienced by the millers and wine-sellers of ancient times remains today and is the defining characteristic of the crimes that we now refer to as food fraud. Michigan State University’s Food Fraud Initiative recently defined it as follows: “Food fraud is deception, using food, for economic gain” (2016). Other crimes that involve tampering with food, say for the purposes of extortion or to cause harm to consumers, are specifically excluded from this definition. Adulteration of food with the intention of causing harm is now widely called an issue of ‘food defense’.

It has been said that there are large networks of organised criminals working together to manufacture and supply fraudulent foods. While that is certainly the case for some types of food fraud, that is by no means the only type of food fraud perpetrator. There are many different people involved with food fraud and each has his or her own motivations.

Ms Natalie Crayton owns an artisan sea salt business in Scotland. Artisan salt typically sells in retail stores for three to five times the price of ‘ordinary’ table salt. In May of 2017, Ms Crayton’s business, Hebridean Sea Salt, was accused by local authorities of deceiving consumers by claiming that the salt was hand-produced from the waters of the Hebrides. Investigations commenced after authorities were tipped off by a former employee. Investors alleged that more than 80% of the product did not originate in the Hebrides but was imported from elsewhere. Ms Crayton claimed that the foreign salt crystals were used to ‘seed’ the Hebridean water to create the product, a practice which is legitimate, but usually achieved with very much lower percentages of added seed crystal.

Local, natural sea salt, from the waters of the Scottish Hebrides…. perhaps

What is to be gained by swapping out some of the locally made salt with imported salt? Of course that depends on the cost of production of the local salt versus the cost of the imported salt. Alibaba is currently listing wholesale food grade sea salt at US$45 and $1000 per tonne, roughly equivalent to £0.03 to £0.77 per kg. If an artisan producer who makes local salt at a cost of £3 per kg with a gross margin of two percent replaces just thirty percent of local salt with imported salt their gross profit could increase from around two pence per kilogram to almost seventy pence per kilogram, an increase of more than three thousand percent. Under that scenario there are significant financial gains to be made from substituting components. On the other hand, there is also plenty to lose.

Since the investigation into the Hebridean Sea Salt company began, it has ceased operation and its products are no longer available in the market. The brand has been severely damaged and may never recover. Ms Clayton may be able to defend her actions in court, or may be able to prove that allegations about the concentration of imported salt in the finished products are false. But, whether or not the claims are upheld, her business faces financial ruin.

Like Ms Clayton, the vice president of Creation Foods, Kefir Sadiklar faces an uncertain future. He and his family-run company were charged by the Canadian Food Inspection Agency over their supply of falsely described ‘kosher’ cheddar cheese to Jewish summer camps in 2015. It is alleged that the company forged documents to make it appear that the cheese was kosher and put the forged documents inside boxes of non-kosher cheese. When the boxes of cheese arrived at one of the summer camps, an employee noticed that some of the boxes bore the COR symbol, a kosher certification trademark, and some did not. The employee requested clarification from Creation Foods, wanting to be sure that the cheese was fit to use at the camp. According to information provided to investigators by the Kashruth Council of Canada, owner of the trademark, Sadiklar provided two certificates. The first was for the wrong food while the second, supplied a few hours later appeared to be correct. However, the employee must have remained suspicious, because he sent the second certificate to Kashruth Council, who noticed that it appeared to be a forgery: a single digit in the product code on the certificate had been altered to match the product code on the box of cheese. The council contacted the police who passed the case to the food inspection agency, which is responsible for enforcing food label laws in Canada. The resulting prosecution is the first of its type in Canada.

Creation Foods is a manufacturer of bakery products, and also acts as a distributor for products made by other businesses, including the cheese it supplied to the summer camps. Creation Foods was certified by the Kashruth Council in 2011 and permitted to use the council’s COR symbol on some of its food products. However, it appears to have a history of using the symbol on non-kosher products and was told to ‘cease and desist’ by the council in 2012 and again in 2013. In 2013 the council issued an alert to businesses that had purchased cakes made by Creation Foods, claiming that the cakes were not kosher despite bearing a COR symbol on the pack and warning purchasers that Creation Food’s use of the symbol was unauthorised.

The allegations about Sadiklar and Creation Foods are damning; they imply a willingness by the company to mislead its customers on a number of occasions over a period of years. Interestingly, the price difference between the non-kosher and kosher versions of the brand of cheese involved is said to be just two to three percent. Does food fraud that increases profits by such a small margin generate enough extra income to justify the risks? Perhaps. When very large volumes of food are involved, even tiny increases in margins can make a significant difference to a company’s bottom line, but in this case large volumes are not likely to be a factor. We do not know if Sadiklar’s motivation was to generate a little more profit from the summer camp order or whether there were other forces at play… perhaps Creation Foods was holding too much stock of non-kosher cheese that was nearing its expiry date, or perhaps they had run out of kosher cheese and risked upsetting their customer by failing to fulfil the order on time. Or perhaps the risk of facing any repercussions seemed so low that even a small monetary gain could somehow feel justified. Sadiklar and Creation Foods denies any wrongdoing so we may never know.

On a more positive note, although the fraud that is alleged to have occurred with this incident was easy to perpetrate, it was also relatively easy to detect: the customer noticed an anomaly with the kosher symbol on the boxes, requested clarification from the supplier and then, when that did not appear quite right, attempted to verify the authenticity of the certification directly with the issuing authority. That is an excellent way to verify the authenticity of certified materials; by contacting the certifier, especially if the certification body is well-respected or are themselves accredited.

A similar case of forged documents resulted in five years jail for the men involved. Mahmudur Rohman and Kamal Rahman were convicted by a British court for conspiracy to commit fraud after Leicestershire food safety inspectors discovered that ‘lamb’ meat they supplied was actually turkey. The tests were conducted as part of a local testing protocol that was implemented after the European horse meat scandal of 2013.

Investigators from the trading standards office revealed that not only was the ‘lamb’ made from an entirely different animal, but the halal certificates it had been supplied with were forged. The company is estimated to have made profits of £300K – £400K during the period in which the frauds were occurring.

Meat seems like an ‘easy target’ for food fraud; it is not easy for customers and consumers to tell the difference between meat species, especially after it has been cooked in dishes like curries. Energy drinks on the other hand are not often featured in news items about food fraud. Meet Walid Jamil who, along with ten others, is being sued by an American energy drink company, Living Essentials, owner of the 5-hour Energy beverage brand. Living Essentials claims Jamil and his associates manufactured and sold counterfeit copies of 5-hour Energy. Jamil has a history of food fraud, having been implicated in an earlier scam in which counterfeit Pillsbury products as well as the sweeteners Equal, Splenda and Truvia were manufactured in a facility in Michigan. No criminal or civil charges were placed against Jamil or his colleagues after that bust, so it’s little wonder that he was willing to get involved with the energy drinks scheme.

It was a big operation: the energy drink counterfeiters were manufacturing replica bottles bearing high quality labels and shrink sleeves in a warehouse in California that operated 24 hours per day and made about 1.5 million bottles a month, according to Geoffrey Potter, the lead counsel for Living Essentials. The drinks were placed into legitimate distribution channels in the guise of diverted product or returns. Sales of the genuine drink were affected and a sales rep for Living Essentials became suspicious about the source of product in a certain retail outlet. He sent a sample to the company’s headquarters for analysis which sparked a recall and investigation. Potter reports that when investigators found the fraudsters there was so much money changing hands that “they had to use shopping bags to pass it out.”

How did the perpetrators make so much money? The significantly lower operating costs incurred by a clandestine operation compared to legitimate beverage manufacturing might surprise consumers. Clandestine manufacturing operations cut corners in every area: cleaning and sanitation, pest control services, facility maintenance, food safety systems, record-keeping, audit fees, labour costs – including through the use of illegal workers – unsafe and unhygienic equipment, substandard ingredients, non-food-grade packaging, untreated water, illegal waste disposal, substandard transport and storage conditions, failure to pay business registration fees, trademark registrations and by avoiding advertising costs. The result is an unsafe product, unsafe work environments and loss of government revenue as well as damage to the brand owners.

Compared to Living Essentials, the fraudsters who produced fake 5-hour Energy could make product and get it to the market much more cheaply. Worse still, although it is often said that consumers can spot ‘fake’ foods because their prices are too good to be true, counterfeiters can and do sell their products at the same price points as their legitimate counterparts. In doing so they stand to make significant profits. However, as we have seen, the perpetrators also have a lot to lose. Civil penalties of $20 million were delivered in the 5-hour Energy case. The price of food fraud can include loss of businesses and livelihood, high profile prosecutions, unwanted media attention, court appearances, jail time as well as million dollar penalties and fines. New cases are uncovered every day by sharp-eyed customers, food inspectors and by insiders who want to do the right thing. For those involved with food fraud, it’s only a matter of time before their crimes catch up with them.